Title 6. Case 6.pdf ✅

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 1 Case 6 | O/N 2023, V1 (Case 1)
AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 2 (a) (i) Job rotation (a) (ii) (1) It is paying the employees on the numbers of units they produce. (2) It is used when output is measurable. (3) Example: If an employee receives $5 per unit and produces 20 units in a day, they will be paid $100 for that day. (b) (i) Old profit = Revenue - DC - IDC = 40 - 26 - 6 = 8 New profit = 52 - 32 - 7 = 13 Change in profit = 13 - 8 = $5m (increase) (b) (ii) One benefit to PS to calculating cost is that it helps to calculate estimated profit. If PS launches new packing they would understand that their costs will increase by $6m direct and $1m indirect. This increase can then be compared to the overall increase in revenue. As it can be seen that by increasing costs by $7 PS was able to boost profits by $5m it helps to ensure that going to environmentally friendly food packing is a suitable option. (c) 8 MARKS Def > Marketing Mix > It is regarded as the combination of four marketing variables namely product, price, promotion and place that need to be adjusted with the changing market conditions. One element is price > since they are launching the new environmentally friendly packing which is more expensive prices need to change accordingly > this is because prices reflect the demand > this can allow PS to charge a premium on this by using a skimming strategy > launch it to target the environmentally friendly businesses > this would allow them to increase their added value they are looking for > exceed the profit target of $5m. [However] this strategy can damage sales > since they are new people might not understand the value > less willing to pay > reduces sales > difficult to sustain the high cost of machinery > packing fails. Another element is promotion > this is useful to highlight the importance in country Z and V to its business customers > offers like bulk discounts + free promotion units with every order they sell > higher willingness to buy > noticed in the market > increase their sales in this new segment. [HOWEVER] PS is new > already facing high cost of production ($7m increase) > giving discounts might damage the premium image + added value PS is trying to achieve > loss of profit margin per unit > loss of profit > difficult to achieve their forecast of $5m > can even go into losses > makes it difficult to sustain these expenses.
AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 3 (d) 12MARKS Evaluate whether PS should use the same payment method and employee development in both factories. [12] Def > Payment methods > these are ways to reward staff for their performance. [ADV 1] > Gives the reputation as a fair employer > by using same payment methods in both factories in country V and Z like using time based and non-financial motivators and employee development they build their image > this helps them to attract the best quality labor + retain them > as with these methods the labor would be motivated > improves productivity like working on new research and development team and designing environmentally friendly packing for food > this helps to boost sales > profits > can help to achieve the forecast profit of $13m. [EVAL] Depends on the % of workers demanding equal pay and opportunities. This strategy is only worth it if a significant number of workers out of 1000 believe it. Changing it because of few employees is not only bad financially but can cause demotivation among other members. [DIS 1] > Cause demotivation > workers who perform better than other would be getting higher returns in piece rates + some would be getting better time based payment > this method will demotivate the highest quality labor > they might quit PS and move to rival brands > with technology changing rapidly in the packing industry labor is crucial to maintain that competitive edge > loss of competitive edge can result in delays in environmentally friendly packing > since the market is B2B rivals can quickly fill the gap > loss of sales > loss of profits > difficult to sustain operations in two countries and maintain 500 workers in the long-run. [EVAL] Depends on the relative importance of financial and non-financial rewards. If PS tends to only modify the base wage and keep the remaining package based on performance then this can work. FINAL EVAL (1) Overall keeping the same payment method and employee development in both factories is not a suitable move because PS is a multinational with 1000 employees operating in two countries. This shows they have a such a diverse labor force with different requirements + roles + functions treating them the same way is just unrealistic and will damage the potential to get the best workers. (2) However it depends on regulations in both country Z and V. If they require the MNCs to pay their base wage then this might still be valid (3) But even in that situation it will just create more problem than it will solve like high cost and demotivation therefore they have to make sure even after same payment method and employee development there should be some added bonuses for the ones who perform above average or perform more difficult tasks like the workers in research. (4) Overall only a base should be standard to create uniformity in basic code of conduct and pay scale but needs to be continuously updated and checked with the market conditions and workers performance in both the factories.